Chapter 4 - Consensus

Question 1

Consensus

Answer 1

A contract will only come into existence if the parties are in agreement on the rights and duties created by their agreement

• it is the most important requirement for a contract

3 Requirements

• every party must intend to be contractually bound
• parties must have common intention
• every party must make his/her intention known

Question 2

How is consensus reached?

Answer 2

1- serious intention to be contractually bound

2- have common intention

3- declare each other’s intention

Question 3

Intention to be contractually bound (duties)

Answer 3

A moral duty with no legal basis e.g social arrangement

A legal duty with a legal basis for breach of contract. Eg employment contract

Question 4

Common intention

Answer 4

The parties must have common intention to contract with each other and

Must intend to create the same legal relationship

Question 5

Make intention known

Answer 5

There must be a mutual awareness of other parties intention either (orally, writing or conduct)

Most common method to determine consensus is to look for offer and acceptance

Question 6

Define Offer

Answer 6

An offer is an declaration made by an offeror

They indicate intention to be contractually bound by mere acceptance of the offer

Offeror sets out the rights and duties he/she wants to create

Question 7

6 Requirements for an offer

Answer 7

Complete

Clear and certain

Communicated

Expressly or tacit

Offer must be binding

Addressed to the general public or a definitive

Question 8

When does an offer fall away?

Answer 8

• after expiry of a certain time period
• after offeror informs offeree the offer is withdrawn/revoked
• if offeree rejects the offer
• if the offeree makes a counter offer
• the death of either offeree or offeror before acceptance

Question 9

Acceptance

Answer 9

An expression of intent by the offeree

Question 10

What makes an acceptance valid

Answer 10

• Unconditional
• Unequivocal
• Consciously accepted by the person to whom it was addressed
• It must comply with legislation if applicable
• when parties contract a at a distance questions marise of when and where acceptance takes place on

Question 11

Acceptance theories

Answer 11

They conclude when arms where an offer takes place:

Information theory
- telephone/fax same as if in person

Expedition theory
- when sent through services like postal service

Reception theory
- electronic agreements, at the time when and at the place where.

Question 12

Factors that influence consensus

Mistake
Misrepresentation
Undue influence
Duress

Answer 12

• misunderstanding with the effect that it does not correspond with the will of the other party- error
• one party induces the other party to enter into a contract through duress
• one party mislead the other into entering into the contract

In some cases these contracts will be rendered r voidable

Question 13

Effect on contract

Answer 13

Mistake - void
Misrepresentation - voidable
Undue influence - voidable
Duress- voidable

Question 14

Mistake

Answer 14

Renders a contract void as there is an absence of consensus.

Question 15

Categories of mistake

Answer 15

Unilateral mistake - only one of the parties was mistaken, while the other was aware

Mutual mistake - a situation where both parties are mistaken about each other’s intention and are thus at cross-purposes

Common mistake- does not lead to disagreement but leads to a contract being void due to underlying supposition

Question 16

What makes a mistake plausible?

Answer 16

A mistake must have influenced a parties decision to conclude a contract to be relevant.

Question 17

Material mistake

Answer 17

An error that negates actual agreement between parties because it relates to an element of concensus.

Question 18

Non material mistake

Answer 18

An error that does not exclude actual agreement between parties because it does not relate to an element of concensus.

Question 19

Historical categorisation of mistake

Answer 19

Error in corpore - this is a material mistake that concerns the contracts subject matter

Error in negotio - this is also a material mistake and concerns the nature of the contract

Error in persona - this is a mistake regarding the identity if the other party to the contract. The courts only regard this a material mistake if it is of vital importance to the mistaken party.

Error in substantia - mistake regarding an attitude of the contacts subject matter, generally not regarded as material.

Question 20

Mistake Types

Motive
Law
Name

Answer 20

Mistake as to the motive of entering into a contract is not regarded as material

Mistake of law not material if it relates to motive

Error in name is not regarded as material
-still contracting with the correct parties

Question 21

Misrepresentation

Answer 21

A false statement of past or present fact, not law or opinion, made by one party to another, before or at the time of the contract, concerning a matter of circumstance relating to it.

Question 22

Misrepresentation classification :

Fraudulent
Negligent
Innocent

Answer 22

Irrespective of classification( fraudulent, negligent or innocent) a party is entitled to restitution if the misrepresentation:

Was made by the other party
Made with the intention of inducing a contract
Was material

Question 23

How can misrepresentation be made?

Answer 23

Words , conduct or even silence.

Silent misrepresentation occurs when a party fails to disclose a material fact in circumstances where there is a legal duty to do so.

Question 24

Intentional misrepresentation

• fraudulent misrepresentation

Answer 24

Made by a person who knew the statement was untrue or who did not honestly believe in the truth of the statement, no matter if it’s right or wrong.

The deceived party claim damages, whether they decide to proceed with the contract or not.

Claim for damages is not a contractual claim but one of delict (violation of the law)

Aim of claiming for damages: to put the party in a position as if the intentional deception had not occurred.

Question 25

Negligent misrepresentation

Answer 25

When a statement is made negligently with the aim of inducing the contract

Does not aim to make a false statement

The party genuinely believes the statement is true but fails to take the necessary steps a reasonable person would in those circumstances to satisfy themselves that the statement is true.

No actual duty is done to check accuracy of statement

Deceived party can claim damages under delict to place ever them in a position as if the deception did not occur.

Question 26

Innocent misrepresentation

Answer 26

Statement was made without intent or negligence

But made with intention of inducing a contact

No claim for damages only allowed to abide of cancel the contract.

Question 27

Duress

Answer 27

Improper pressure that may amount to intimidation. The coercion of will.

Contract if voidable when

• physical violence, reasonable fear and or damage
• threat must be imminent/inevitable
• threaten must be unlawful
• duress must be by one party on the other
• MUST cause conclusion of a contract

Question 28

Undue influence

Answer 28

Also a form of Improper pressure on a party to force him/her to enter into a contract but is more subtle than duress

The undermining of the will of the other party. A relationship where one party abuses a superior position to influence the other.

Persuasion to conclude a contract

Contract is voidable when :
Party has influence
Used to weaken victims ability to resist
Party uses influence to persuade the victim to consent to a contract he would have done out of free will.